The recent onslaught of foreclosure cases in Florida has left the judicial system overburdened and understaffed, and many homeowners without hope. Effective communication between banks and homeowners is one of the largest hurdles to solving this crisis. Often times, borrowers seek a loan modification or settlement option with their bank, but the banks either fail to respond, provide misleading information, and/or deny assistance without explanation.

Thankfully, this failure to communicate has not gone unnoticed by the Courts. On December 28, 2009, the Supreme Court of Florida passed an Administrative Order requiring banks to go to mediation with homeowners before foreclosing on residential property in Florida. In its Order, the Court concluded that “mandatory mediation . . . will facilitate the laudable goals of communication, facilitation, problem-solving between the parties with the emphasis on self-determination, the parties’ needs and interests, procedural flexibility, full disclosure, fairness, and confidentiality.” Mandatory mediation applies only to homestead property. It does not apply to investment or rental property.

Mediation is a way of resolving disputes between two or more parties. It is administered by a mediator, who is a neutral third party that assists the parties to the lawsuit in negotiating their own settlement. The entire process is private and confidential. 

In the Fourth Judicial Circuit, which includes Duval, Nassau and Clay counties, The Jacksonville Bar Association administers the Residential Mortgage Foreclosure Mediation Program (RMFMP) per the Supreme Court’s Administrative Order. Florida’s other judicial circuits have similar programs which also implement the Supreme Court’s mandatory mediation requirement. These programs create an opportunity for borrowers first to obtain credit counseling, and then to meet with a mediator and the lender’s representative to determine if an agreement can be reached to help the borrower stay in the home. 

These mediations may result in a loan modification, a short sale, a deed in lieu of foreclosure, or else an impasse, which usually proceeds to foreclosure. Participation is mandatory for lenders, but optional for borrowers, and the borrower pays no fee.

The RMFMP process is marked by the commencement of the foreclosure lawsuit and receipt of “Form A” from the lender (certifications pursuant to the Administrative Order), communicating with the borrower, scheduling financial counseling, processing paperwork, monitoring compliance of court orders by all entities, setting and conducting mediation, and providing reports throughout the entire process to the court. The program cycle can take up to 120 days. Accompanying the foreclosure summons to the borrower is a letter from the court that briefly explains the program. After the lawsuit has been filed, the RMFM Program Manager for the particular judicial circuit receives a copy of a completed Form A from the bank‘s attorney, with the case number of the lawsuit and contact information for all parties.

Upon receipt of Form A, the RMFM Program Manager begins efforts to contact the borrower to explain the RMFM Program and the requirements that the borrower must satisfy to participate in mediation. If the borrower is unable to be contacted, a notice of nonparticipation is filed with the court. Once the borrower agrees to participate in the mediation process, the RMFM Program Manager refers the borrower to a HUD-certified mortgage foreclosure counselor for a credit counseling session. With the counselor’s help, the borrower completes and returns to the RMFM Program Manager a Financial Disclosure for Mediation Form and a Borrowers’ Request for Plaintiff’s Financial Disclosure.

After the Borrower’s Financial Disclosure forms have been transmitted to the bank, the RMFM Program Manager schedules a mediation session. Supreme Court Certified Circuit Civil Mediators specially trained to mediate residential mortgage foreclosure disputes conduct the mediations. Regardless of whether a full or partial settlement agreement is reached, the result of mediation is reported to the court, but communication made during mediation remains confidential.

This mandatory mediation program may not eliminate the foreclosure crisis, but it is designed to help both the courts and our community by providing a meaningful opportunity for homeowners to work out a loan modification or other settlement with their bank.